Seven years later, many commodities—including oil, copper, and gold—have fallen in value and out of favor for a host of reasons.
 
So what’s next for this timeless asset class?
 
In a piece published Wednesday, Street Authority writer David Sterman discussed what legendary investor Jim Rogers is thinking about an investment category he has helped promote in recent years.
 
Over the past two decades, Rogers, who rose to fame in the 1970s when he partnered with George Soros to run the highly successful Quantum Fund, has staked his reputation on the belief that commodity prices would get a lift from growing demand from the emerging nations of Asia for food and basic building materials.
 
He even helped develop a series of commodity-related exchange-traded funds tied to proprietary indexes, including the Rogers International Commodity ETN.
 
As Sterman writes, Rogers “concedes that he didn’t expect the current commodities meltdown, but is sticking with his view that commodities are still in a long-term bull market.”
But Rogers is taking a nuanced view of the asset class. For example, according to Sterman, he remains a perma-bull on agricultural commodities, “believing that rising consumption in many emerging markets is bumping up against the realities of scarce arable land.”
 
But when it comes to gold, he thinks that the metal could easily drop to below $1000 dollars an ounce, which would put it at nearly half of its all-time high.
 
Commodities no doubt feel pressure in part because of the rise of the dollar relative to other currencies. But as economist and market forecaster A. Gary Shilling puts it in a column for Bloomberg View, a strong dollar, which is “likely to remain strong in the long run,” has many beneficiaries in the United States.
                 
“You might expect a strengthening dollar to depress U.S. economic growth by encouraging cheaper imports and reducing more expensive exports, but the actual effects are small, as are the resulting deflationary pressures,” Shilling writes. “When a currency strengthens, exporters don’t pass on the cost to buyers but shave their profit margins to avoid losing sales.
 
“Conversely, importers don’t pass all of the currency’s rise on to customers, and instead fatten their profit margins,” he adds.
 
Shilling also points out that a rising greenback attracts foreign investment, which promotes domestic economic growth and a stronger currency. “The appreciating dollar and stability of the U.S. continue to attract wealthy foreigners to real-estate markets in New York City and elsewhere, even with the prospect of very low returns,” he adds.
 
I’ll close this column with a marker of investment sentiment that I’ve never come across before.
 
“You can now add another indicator to the bullish extreme camp as the amount of assets in the Rydex S&P 500 bullish fund is now double the amount in the bearish fund for the first time since February 2001,” according to the JLFM Blog (managed by the J. Lyons Fund Management).
 
During the years surrounding the 2000 market top, the ratio of bullish to bearish assets among the two Rydex funds regularly hit 2 to 1 – that is, twice as many assets in the bullish Nova fund as the bearish Ursa fund.
 
“The 2000-2002 bear market took a toll on investors’ psyches as the ratio failed to attain those heights again. During the mid-2000’s, the top of the normal range in the ratio was around 1:1. In subsequent years, there were generally more assets in the bearish Ursa fund (as hedges) than in the Nova fund.
 
But according to the blog post, “in the beginning of this year, this began to change. In January, the ratio spiked above 1:1 for the first time since 2004. It eventually reached near 1.7:1 around the short-term tops in July and September. And in the past few days, the ratio has exploded above 2:1 for the first time since February 2001.”
 
“It is difficult to explain this away as anything other than a jump in bullish sentiment,” the post concludes.